ANNUAL REPORT 06 - Bosnalijek dd

Bosnalijek d.d.Statement of income for the year ended 31 December 2006(All amounts are expressed in thousands of KM)27. RELATED PARTY TRANSACTIONSDirectors' and executives' remunerationThe remuneration of directors and Supervisory Board members duringTrade and other payables comprise amounts outstanding for tradepurchases and ongoing costs. Management considers that the carryingthe year was as follows:Gross salariesBonusesOther benefits2006.710710781.4982005.(RESTATED)502684691.255amount of trade and other payables approximates to their fair value.Foreign currency riskThe Company raises funds from loans and other liabilities. Therefore, theCompany is exposed to market risk related to possible foreign currencyfluctuations. The Company does not have financial instruments to reducethese risks.28. OTHER FINANCIAL ASSETS AND LIABILITIESInterest rate riskTrade and other receivables comprise amounts receivable for the sale ofgoods. The average credit period taken on sale of goods is 123 days (2005– 113). An allowance has been made for estimated irrecoverable amountsInterest rate risk is the risk that the value of the Company’s long-termdebt will fluctuate due to changes in market interest rates. The Companydoes not have financial instruments to reduce these risks.from the sale of goods of KM 2,483 thousand (2005 – KM 2,305thousand). This allowance has been determined by reference to pastdefault experience. Management considers that the carrying amount oftrade and other receivables approximates to their fair value.Credit risk29. APPROVAL OF FINANCIAL STATEMENTSThe financial statements were approved by the Management Board andauthorized for issue on 23 February 2007:The Company’s credit risk is primarily attributable to its trade and otherreceivables. The amounts presented in the balance sheet are net ofallowanced for doubtful receivables, estimated by the Company’sManagement based on prior experience and the current economicenvironment. The Company has no significant concentration of credit risk,with exposure spread over a large number of counterparties and customers.Edin ArslanagićDirectorŠefik HandžićExecutive director for finance and economyserving Your health INDEPENDENT AUDITOR’S REPORT ANNUAL REPORT 06 71